On March 6, 2017, the House Ways and Means Committee and the House Energy and Commerce Committee, each released budget reconciliation bills. These pieces of legislation are part of the House Republican’s American Health Care Act (AHCA), the legislation designed to repeal and replace the Affordable Care Act (ACA). On March 9, the recommendations cleared the Ways and Means and Energy and Commerce Committees as a consolidated bill. The bill now heads to the House Budget Committee. The full House is expected to act on the AHCA by April 7th.
If passed, key provisions of the AHCA that will impact employers include:
Employer Mandate – The AHCA proposes a retroactive repeal of the employer mandate penalties effective beginning on or after December 31, 2015. This means that penalties would not be assessed against Applicable Large Employers for the 2016 tax year.
Small Business Tax Credit – The AHCA would repeal the ACA small business tax credit beginning in 2020.
Cadillac Tax – The AHCA does not repeal the 40 percent excise tax on high-cost employer sponsored health coverage known as the “Cadillac Tax”, but instead delays its effective date to 2025. Under the ACA this tax was originally set to take effect in 2018 but was later delayed until 2020.
Coverage Incentives – The AHCA would repeal the cost-sharing subsidy program. Instead it would encourage individuals to maintain health insurance by establishing a continuous health insurance coverage incentive. Individuals who have a lapse in coverage of more than 63 days will be required to pay a 30 percent premium surcharge for 12 months when coverage is purchased. Prior to 2015, group health plans were required to distribute certificates of creditable coverage. This concept may return if individuals are required to substantiate continuous coverage to avoid a 30 percent premium surcharge.
Account Based Plans – The AHCA would change several current rules that apply to health Flexible Spending Accounts (FSAs) and Heath Savings Accounts (HSAs). HSA contribution limits would be increased to match high deductible health plan out of pocket limits, and spouses would be able to make catch-up contributions to the same HSA. The AHCA would remove the health FSA contribution limit. HSA and health FSA could be used for over the counter medications. Currently, HSA and health FSA funds cannot be used for over the counter medications without a prescription.
Reporting Requirements – Although the AHCA would repeal Employer Mandate penalties it does not repeal the Code 6055 and 6056 reporting requirements that currently apply to employers with self-funded group health plans and Applicable Large Employers. Employers continue to be subject to these requirements. However a simplified reporting method for employers on the Form W-2 may be forthcoming.
Please contact your AssuredPartners Benefits Team if you have questions or need assistance with this topic or other compliance matters.Share This: